Former Stanford officer gets 5 years in prison

Updated 9:05 pm, Tuesday, January 22, 2013

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James Davis, center, enters court Tuesday for sentencing with his wife, Laurie, and attorney David Finn. He was sentenced to five years in prison, followed by three years of probation. Davis told a judge, "I perverted what is right and I did wrong."

James Davis, center, enters court Tuesday for sentencing with his wife, Laurie, and attorney David Finn. He was sentenced to five years in prison, followed by three years of probation. Davis told a judge, "I

James Davis, right, enters the Federal Courthouse with his wife, Lori, Tuesday, Jan. 22, 2013, in Houston. Davis, who testified against Allen Stanford, will receive his sentence today. He could face up to th 30 years for his role in one of the biggest Ponzi schemes in U.S. History.

James Davis, right, enters the Federal Courthouse with his wife, Lori, Tuesday, Jan. 22, 2013, in Houston. Davis, who testified against Allen Stanford, will receive his sentence today. He could face up to th 30

Former Stanford CFO James Davis, replicating for jurors the handcuffing motion he used to make to warn R. Allen Stanford that what they were doing was illegal Thursday, February. 2, 2012 in Houston, Texas. Davis, who pled guilty for his part in a $7 billion Ponzi scheme headed by Stanford, testified against the flamboyant Texas tycoon during Stanfords fraud trial in Houston on Thursday. (Ken Ellis/Houston Chronicle)

Former Stanford CFO James Davis, replicating for jurors the handcuffing motion he used to make to warn R. Allen Stanford that what they were doing was illegal Thursday, February. 2, 2012 in Houston, Texas.

Another confederate of disgraced financier R. Allen Stanford is headed to federal prison for his role in a multinational, multibillion-dollar fraud that cheated an estimated 28,000 investors with worthless certificates of deposit.

James Davis, a former college roommate of Stanford who rose from bookkeeper to chief financial officer of Stanford Financial Group, was ordered to federal prison for five years, followed by three years of probation.

The prison term is more than the four years maximum Davis had sought - in return for his extensive cooperation with the government and subsequent testimony that help convict Stanford last year and earn him a 110-year sentence - but less than the decade behind bars recommended by federal prosecutors.

"How do you reward cooperation?" Assistant U.S. Attorney Jason Varnado said to U.S. District Judge David Hittner. "And his cooperation was outstanding."

Davis' attorney, David Finn, stressed that cooperation to Hittner. Finn said Davis confessed his guilt during their first conversation.

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CALCULATING JUSTICE

Former Stanford Financial Group executive James Davis was sentenced Tuesday to five years in federal prison. The government and the defense made separate recommendations based on several factors.

The crime: Prosecutors said Davis was "involved in the most instrumental of ways in one of the most significant financial crimes in our nation's history." As the top executive to the fraud's mastermind R. Allen Stanford, he was required "to lie, deceive or obfuscate on an almost daily basis" for 20 years in a crime that "ruined the lives of thousands."

Cooperation: But they and Davis' defense attorney agreed that his early and substantial cooperation with federal authorities was critical to the prosecution that got Stanford a 110-year prison sentence. His lawyer cited Davis' "extraordinary efforts" in helping "unravel Stanford's extremely complicated fraud scheme."

Davis' age: Davis is 64. His attorney quoted statistics from the U.S. Sentencing Commission that, among first-time prisoners over age 50, only 6.2 percent commit further crimes.

Incarceration costs: The defense also cited a 2004 study from the National Institute of Corrections showing that it costs $34,135 annually to lock up the average inmate, but it costs $68,270 to lock up those older than 50.

Recommendations: Prosecutors asked U.S. District Judge David Hittner to sentence Davis to 10 years in prison; the defense sought a term of no more than four years.

Source: U.S. District Court documents

"I'm not telling your honor my client is a saint ... but from the moment we met, he was remorseful, contrite and trying to make amends," Finn said.

Davis, 64, held back tears and said as much in court.

"I'm ashamed and embarrassed," he said. "I perverted what is right and I did wrong. I hurt thousands of investors. I betrayed their trust and also of associates, neighbors and friends and my family, this court, this country, my alma mater, the United States Navy, everything I was a part of. I failed them, and I'm sorry."

Davis made about $13 million over 21 years, though he did not live the "playboy life" like his former boss, prosecutors noted in a court filing.

Stanford was said to have spent millions on planes, yachts and homes all over the world.

Davis looked down as Hittner read the judgment.

He had faced up to 30 years in prison after pleading guilty to mail fraud; conspiracy to commit mail, wire and securities fraud; and conspiracy to obstruct a Securities and Exchange Commission investigation.

Hittner said he would recommend that Davis be sent to a prison camp near Memphis, Tenn., where he has family.

The government values the global Stanford fraud at $5.9 billion in worthless certificates of deposit issued by Stanford International Bank in the Caribbean nation of Antigua, plus $1.3 billion in fictitious interest.

In November, two other former Stanford executives were convicted on multiple criminal charges in connection with the scheme. Former global controller Mark Kuhrt and former accounting chief Gilbert Lopez are scheduled to be sentenced next month.